By my math it’s a good deal for him as he is essentially a wash between his lease rate and his annual distributions from reinvesting the proceeds; no capital gains exposure and has $2.98m working for him at a healthy 10%, and exposure to a sponsor relationship that has tremendous, yet intangible value.

Can this be escalated up to someone who can over ride it in anyway, etc? 

I’ve seen it exclusively on this forum where others have put in offers that’s are  escalating offers to some amount.

On a recent one, we needed $7k added back, I felt we had $9500 in clear "one time" stuff, the underwriter came up with $4200 and we had to fight/escalate to get a smidgen over $7k to make the deal work (this was a refi of some other property to save a few bucks a month, not a purchase mortgage, so I felt OK about taking this risk). 

I trust that you'll find tremendous tax saving opportunities simply by hanging around the BP forums, and even more so by engaging a real estate savvy CPA. 

Cleaning, decluttering, and staging will help tremendously.

There is a section regarding "Escalation Income".

Thank you for answering, knowing this helps tremendously.

However, if the house is built with wood, just know that the flood has affected the structure of the house tremendously.

Learned a tremendous amount and look forward to taking you up on your offer of seeing the progress of how you flip properties.